Oracle's edge

The software giant will no doubt feel some pain as companies scale back staff. But its stable infrastructure business will help it weather the storm better than most. Say what you will about Larry Ellison's style, but the in-your-face founder of Oracle knows how to manage a company through a recession, at least so far.

In an economic climate where other companies are heading for the lifeboats, Ellison is skippering Oracle into a position of strength. And it comes down to selling software that relies on a growing stream of corporate data, rather than a growing number of employees.

During a recent conference call, Ellison and his management team were practically optimistic, projecting that overall revenue for Oracle's fiscal third quarter ending in February will be up from 8% to 11% adjusting for currency exchange.

In its most recent second quarter, revenue came in below guidance, with sales growth of 6% (9% was the Street's estimate), but with operating profit margins at almost 46%, above estimates, and pointing to Oracle's ability to maintain pricing power. (Earnings were down slightly for the quarter, a slip Oracle blamed on the strengthening dollar.)

Oracle (ORCL, Fortune 500) is feeling some pain, like every other company out there, but so far it is not as acute. And when you dig into the numbers, it gives you a sense of why Oracle may offer relative safety in these uncertain economic times.

Oracle sells both applications -- human-resources software and customer-relationship software, for example -- and so-called infrastructure software. The latter includes Oracle's core database products, as well as middleware, which acts as a sort of glue between all kinds of software and services.

Applications are generally sold on a per seat basis, so revenue is based on staff size at Oracle's customers. Infrastructure software is sold based on capacity, the number of processors (CPUs) in a server running the software, for example.

The scary issue for a lot of tech companies is of course is one of headcount. As companies cut numbers to weather the recession, they are also cutting the number of seats they need for any number of applications. But companies are less likely to scale back on the efficiencies an automated enterprise can offer them, so that business is not as vulnerable.

Because it is driven by "data, not heads, the (infrastructure) segment should be more stable than other software businesses through the recession," writes Morgan Stanley analyst Adam Holt, who has an "overweight" rating on Oracle, with a 12-month price target of $22.

In that context, data versus heads (or applications versus infrastructure), investors would be wise to look at other software companies SAP and Microsoft, for example, which will be subject to the same forces.

In the second fiscal quarter, Oracle posted database and middleware revenue of almost $3 billion, up 4% year over year. During the same quarter, the applications business was flat to slightly down.

"Oracle's negative year-over-year growth in applications do not bode well for SAP," says JMP Securities analyst Patrick Walravens, who has a "market perform" rating on Oracle. SAP has a very application-heavy product offering. "Our checks so far suggest SAP has already seen some of its larger deal prospects in North America push out."

At some point the economy will recover, and headcount will once again grow. At that point, Oracle will be able to push its applications business harder. In the meantime, unlike some of its competitors, Oracle has the leverage to wring additional revenue from its infrastructure business, and sail -- as it did after the tech bubble burst -- far ahead of the pack.

Author: Michael V. Copeland @ money.cnn.com

Read more ...

Despite Tech Slump, Oracle Hits Its Mark

Oracle's bread-and-butter database business is faring better in the recession than its business applications, which companies use to manage finance, HR, sales, and other functions. Sales of new applications licenses fell 15 percent, to $469 million, during the quarter. Oracle's database and application-connecting middleware license sales grew.

During the tech industry's last big slump, software and hardware Relevant Products/Services vendors were slow to cut costs as falling demand pummeled profits.

This time around, Oracle isn't taking chances. Oracle, the world's No. 2 software company, hit Wall Street's earnings target when it reported fiscal second-quarter results on Dec. 18, by aggressively cutting research and development, travel, and other costs as its customers curtail spending.

Amid a global economic slowdown that's sapped business demand for computers and software, Oracle widened operating margins in the quarter ended Nov. 30 to 46 percent, compared with 41.3 percent a year earlier. While the software maker missed Wall Street's estimates for total sales and new software bookings, its earnings of 34 percent a share, excluding certain items, met analysts' projections. Better still, Oracle issued a third-quarter earnings outlook roughly in line with Wall Street estimates.

Shares of Oracle gained 4 percent in extended trading, after closing Dec. 18 down 13 percent, or 0.8 percent, at 16.61. The shares have lost 2.4 percent in the past month, compared with a 4.7 percent gain for the Nasdaq Composite Index.
Wide Range of Products Helps

Oracle displayed a knack for slicing costs while offering customers a wide range of products that it's assembled through a slew of acquisitions the past four years, analysts said. "This company can hold the bottom line better than anyone," says Brent Thill, Citigroup's software research director, who rates Oracle's stock a buy.

Analysts said Oracle has cut expenses in sales and marketing, and overseas R&D, and reduced sales and back-office expenses from its January acquisition of BEA Systems. A wide breadth of products lets Oracle salespeople zero in on where customers are still spending. "It all goes back to the all-you-can-eat buffet at Oracle," Thill says. "You can pick one thing or everything, and they have something they can talk to a client about."

The appetite for cost-cutting is catching across tech. Dell beat Wall Street's profit forecasts in its third quarter, reported Nov. 20, by taking an ax to expenses, despite ringing up sales that were more than $1 billion short of expectations. Troubled computer maker Sun Microsystems in November said it plans to cut up to 6,000 jobs, or 18 percent of its staff. Tech firms including Adobe Systems and Western Digital have announced plans to shed workers as well.

Net Income Falls amid Sales Slowdown

"Within technology we're seeing revenue weakness but good profitability," says Andy Miedler, a senior technology analyst at Edward Jones, who has a buy rating on Oracle. "Companies are more aggressive with cost-cutting during this downturn due to the lessons they learned with cutting costs too slowly during the tech wreck last time."

Cost-cutting aside, sales still take a hit when customers slash information technology budgets. Oracle's net income fell 0.5 percent, to $1.27 billion, in the second quarter, and sales were up 5.5 percent, to $5.6 billion, vs. analysts' consensus estimate of $5.84 billion. New software license revenue, an indicator of future sales, was down 3 percent to $1.6 billion. The closely watched metric fell far short of Oracle's forecast three months ago, when it said new license revenues would rise 2 percent to 12 percent. The bookings are a key measure of Oracle's performance, since they often produce additional tech support Relevant Products/Services revenue.

"Customers are signing up for fewer multiyear, $100 million projects," said Chief Executive Larry Ellison during a conference call with analysts. "Fortunately we have a very broad portfolio." A strong dollar is also hurting Oracle's results, as overseas sales translate into fewer dollars on the company's books.

Applications Vulnerable to Downturn

Oracle's bread-and-butter database Relevant Products/Services business is faring better in the recession than its business applications, which companies use to manage finance, HR, sales, and other functions. Sales of new applications licenses fell 15 percent, to $469 million, during the quarter. Oracle's database and application-connecting middleware license sales grew nearly 4 percent, to $1.16 billion.

"The applications business is in tough shape," says Citigroup analyst Thill. Applications revenues are more vulnerable in a weak economy, as companies protect database and middleware projects that can yield business information to help them compete, Thill wrote in a Dec. 2 research note. Oracle is locked in an applications market-share battle with SAP, which in October cut its profitability outlook for the year.

Oracle also issued a downbeat forecast for its third quarter, which ends in February. Assuming today's exchange rates, Oracle said it expects to earn 31 percent to 33 percent per share, vs. Wall Street's expectation of 34 percent per share. Oracle co-President Safra Catz told analysts that the company is expecting a record low in the pace of deal closings for that period of the year.

Lots of Acquisition Candidates

Oracle has been posting bang-up results for the past few years, largely by spending more than $25 billion to buy more than 40 software companies since 2005. In addition to having more products to sell, Oracle can also sign up customers added through acquisitions for lucrative tech-support contracts.

In recent months, Oracle has hinted it may hold to that strategy. There are at least 50 publicly traded software companies with $300 million to $6 billion in annual sales that Oracle could potentially acquire, said Mark Murphy, an analyst at Piper Jaffray who rates Oracle a buy, in a Dec. 12 research note. In September, Ellison said Oracle might take advantage of depressed stock prices to buy up more software companies on the cheap.

Now, Ellison said prices have dropped so low that some companies may resist being bought. "Some companies have much more attractive valuations right now, but I'm not sure they'd be wildly enthusiastic about selling for cash [value]," he said on Dec. 18.

When markets rebound and an M&A freeze thaws, Oracle could nevertheless be poised to spring. "As we come out of this cycle, Oracle is extremely well positioned," says Israel Hernandez, a director at Barclays Capital, who has an overweight rating on Oracle's stock. "They're going to come out a much stronger company after the recession." Until then, Oracle and other tech firms may have to keep looking for costs to chop.

Author: Aaron Ricadela @ www.newsfactor.com

Read more ...

The top advice from Oracle experts in 2008

Whether you have a question about Oracle errors, backups, upgrades or jobs, SearchOracle.com has an expert panel ready to help. This year our experts answered questions on all these topics and more - - here's a look back at some of our most popular expert questions and answers of 2008.

TABLE OF CONTENTS
1. What is the ORA-03113 error?
2. How to get history of modified data from Oracle databases
3. How DDL and DML commands work in Oracle
4. How to do a hot backup when Oracle Database is up
5. When should an Oracle database be reorganized?
6. Tips for how to size an Oracle server
7. When to use CHECK constraints in SQL
8. When to do a manual upgrade vs. export and import
9. What is the difference between a database engineer, architect and administrator?
10. How to archive and decommission a database

What is the ORA-03113 error?
Q: We have an Oracle 10g database and get the ORA-03113 error sporadically. This is a science application where we query time-series data from a vb.net application. We can query successfully all day with some parameters (location, variable identifier, and date range) but when the date range changes beyond a (arbitrary?) limit (e.g. 2003 to 2007 works every time, but 2002 to 2007 fails every time), this error appears. We get a similar error using Oracle's sqldeveloper, though the error message text is different. Where do we start looking for answers?

A: ORA-3113 errors mean that your network connection to the database was severed. In my experience, there are two problem areas. One, something in the network failed between the client and the database. Two, a bug in the database caused the session to be terminated and the client thinks a network error was the cause. If you are sure your network is fine, then it is probably a bug. Make sure you have the 10.2.0.3 patchset installed. After that, file a Service Request with Oracle Support. Only they will be able to help you with the ORA-3113 error.


What is the ORA-03113 error?
Q: How can you get the history of data modified from an Oracle database?

A: There are a few options at your disposal. After the fact, you can mine your archived redo logs using Oracle's Log Miner utility. Before the fact, you can set up auditing to record changes...


How DDL and DML commands work in Oracle
Q: What happens in the background when we execute DDL or DML commands?

A: First, Oracle parses the statement and ensures that the statement is syntactically correct and semantically correct. Next, Oracle verifies that the user has permissions to perform the statement. If the user can execute the statement, Oracle obtains all locks necessary for the statement to complete. Once the locks have all been obtained, Oracle executes the statement. In some cases, results are returned. If results are returned from the statement, Oracle fetches those results and places the result set in an area called a 'cursor'. The cursor is passed back to the application.


Hot backup when Oracle Database is up
Q: What is the procedure for doing a hot backup when the database is up?

A: There are two ways. The preferred way with Oracle's databases today is to use RMAN. The following will perform a hot backup using RMAN.
Read expert Brian Peasland's recommended steps for using RMAN and learn more about RMAN and hot backups.

When should an Oracle database be reorganized?
Q: When should a database be reorganized?

A: Never. A well-designed database should never need reorganization. It used to be that a DBA would perform a weekly or monthly reorg to help database performance. But today's Oracle databases do not need regularly scheduled reorgs to perform well. Bad design can throw this theory out the window though.

Tips for how to size an Oracle server
Q: Do you have any suggestions on where I can find the following information, with recommended server hardware specifications for how to size an Oracle server? I'll be using storage area network (SAN) storage.
Number of processors
Quantity of RAM

I've searched the Oracle site and even though there are a number of white papers, I haven't seen anything like the old 9i sizing guide.

A: I have not seen any sites or other pieces of information that would give you the information that you seek. And I would be leery of the information presented. The amount of memory, processors, and other system resources are not dictated by the total volume of data in the database.

CHECK constraints
Q: How can I create a constraint to not allow a date prior to 1 Jan 2007 to be entered?

A: This is accomplished with a CHECK constraint. Here's an example:
create table documents
( id integer not null primary key
, title varchar(99) not null
, added date not null
, constraint only_new_ones
check ( added>= '2007-01-01' )
);

Manual upgrade vs. export and import
I am ready to upgrade. My database size is 200gb and it is an unsupported version of Oracle to upgrade to 10g(8.1.6.2 to 10g). It's O/S is on HP-UX, so could you tell me whether the best process for upgrade is to follow the manual upgrade process or by using the export & import to the new Oracle Database? If I follow the manual method then I have to apply the 8i to 8i Patches then to 10g . If I follow exp/imp then I need more down time. Which process should I follow?

A: If you perform the manual upgrade process, then you will have to be at least at Oracle 8.1.7 before you can begin. So to go from 8.1.6.2 to 10g, you will need two upgrades with this path. If you use export/import, then you will only need one upgrade. On average, each manual upgrade will take about 1 hour, but this time can vary. So without knowing more about your environment, the manual upgrade process will require about 2 hours of downtime. Using export/import for a 200GB database will probably take longer. So the big question to answer here is how much downtime can you take for the upgrade? If you had a larger downtime window, then you might use exp/imp for the upgrade. The exp/imp method also lets you perform some reorganization like moving objects to new tablespaces.

What is the difference between a database engineer, architect and administrator?
Q: Could you please explain the differences between a database engineer, a database architect and a database administrator?

A: Great question! It can get pretty confusing as these titles (and many more including database developer, data architect, data analyst, data modeler, database designer, etc.) are often intermixed, used improperly, or redefined by the companies using them. The definition really depends on the actual job descriptions as defined by the various companies posting them. I will do my best, however, to differentiate and simplify them for you...

How to archive and decommission a database
Q: What would be the best way to archive and decommission a 5GB Oracle 7.3 Database? This data needs to be available for at least 20 years from now in case a regulatory agency requires it, and we are afraid that in the future we won't be able to recover it to a newer version of Oracle.

A: I use Oracle's export utility for this type of task. Your database isn't too large, so exp will work. The nice thing about exp is that future versions of Oracle will still be able to read the resulting dump file. So perform the following:
exp userid=system/manager file=my_db.dmp log=my_db.log full=y

The resulting files can then be written to DVD or some other media for long term storage.

Source: Shayna Garlick @ searchoracle.techtarget.com

Read more ...